German Solar Feed in Tariff Story gets another Twist as Upper House refuses to pass the Law

The German Solar Feed in Tariff cut scheduled for July 2010 has got another twist with the Upper House of German Parliament Bundesrat not passing the Law in its current form.The one-off German Feed in Tariff cut has seen enough twists and turns to make a person go giddy . It all started with the new German government deciding to cut the high Solar FIT which was leading to outsized returns for investors installing solar panels in Germany leading to a situation similar to Spain’s 2008 solar frenzy .The reason was that the solar module prices had gone down by almost 50% in 2009 with the FIT rate ( higher subsidized electricity rates given to generators of renewable energy) going down by the only scheduled 10% .So in addition to the annual 10% 2010 cut , the German government decided to add another 16% Feed in Tariff cut byMay 2010 which led to a huge uproar from the industry.This led to a lot of bargaining between the industry,the coalition partners of the German government and the various industry lobbies.Ultimately the law went in with almost the same percentage of cuts but the cut was delayed from May to July . With the German Lower House Bundestag passing the government proposal , the Bundesrat’s approval was only supposed to be formality.However it seems that the Eastern German states which have the most to lose in terms of jobs and taxes from these cuts want to reduce the quantum of the cuts which in their original form would lead to a ~35% cut in one year.The law which is supposed to go into effect by July 1 might see more delays as it leads to more negotiations.

Germany‘s Bundesrat upper house of parliament is unlikely to pass cuts to solar incentives on Friday, so a mediation committee would be needed to resolve the matter, government sources told Reuters on Thursday.If the parliamentary committee is called, the proposed cuts, which include a 16 percent reduction in so-called feed-in tariffs for new rooftop solar installations, would not be able to take effect on July 1 as planned, the sources said.

The impasse has arisen because states in eastern Germany, along with the big western states of Baden-Wuerttemberg and Bavaria, where the solar industry is strong and provides thousands of jobs, have decided to block approval, sources said.The Bundesrat, which represents Germany‘s 16 states, is due to vote on the planned changes on Friday.The cuts, which have been passed by the Bundestag lower house, could still be applied retroactively, the sources said.

Sneha Shah

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